Global Strategy – Organising Framework (GHOSHAL)

	Sources of competitive advantage
Strategic options	National differences	Scale economies	Scope economies
Achieving efficiency in current operations	Benefitting from differences in factor costs (e.g. wages, and cost of capital) IDJ SouthCo Nextron WOFE	Expanding and exploiting potential scale economies in each activity IDJ SouthCo Nextron WOFE	Sharing of investments and costs across products, markets and businesses IDJ SouthCo Nextron WOFE
Managing risks	Managing different kinds of risk arising from market or policy-induced changes in comparative advantages of different countries IDJ SouthCo Nextron WOFE	Balancing scale with strategic and operational flexibility IDJ SouthCo Nextron WOFE	Portfolio diversification of risks and creation of option and side-bets IDJ SouthCo Nextron
Innovation, learning and adaptation	Learning from societal differences in organisational and managerial processes and systems IDJ SouthCo Nextron	Benefitting from experience (cost reduction and innovation) IDJ SouthCo Nextron	Shared learning across organisational components in different products, markets or businesses IDJ SouthCo Nextron

Consider options based on Organising Framework:

IDJ Nextron SouthCo WOFE

This shows that for XTech there are a good many reasons for being in a global market and for carrying out its production globally.

Highlighted by this analysis is the lack of advantages offered by the WOFE option, where the gains of a Joint venture are lost. However, this must be offset against the complications and risks associated with Joint Ventures:

· the objectives of the venture are not 100 per cent clear and communicated to everyone involved

· the partners have different objectives for the joint venture

· there is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners

· different cultures and management styles result in poor integration and co-operation

· the partners don't provide sufficient leadership and support in the early stages

· information transfer and subsequent risk of competition from partners